U.S. Budget Deficit for 2009 Nears $1 Trillion

ByJeff Bater

The U.S. budget deficit closed in on $1 trillion just halfway through the fiscal year, driven by a recession that’s sucked away tax revenues and sent millions of people scrambling for jobless benefits.

The federal government posted a budget deficit of $192.27 billion in March, the sixth month of fiscal 2009, the Treasury Department said Friday. The government has run a deficit for six straight months. The last time that happened was October 2003 through March 2004. The record streak is May 1991 through March 1992.

A survey of economists by Dow Jones Newswires forecast a March deficit of $150.0 billion. The Congressional Budget Office had estimated a deficit of $191 billion.

For the first six months of fiscal 2009, the budget shortfall totaled $956.80 billion. In the first six months of fiscal 2008, the government ran a deficit of $312.75 billion. In all of fiscal 2008, the government ran a deficit of $454.80 billion, which was a record high.

Spending on government programs to rescue Wall Street and tax revenues shrunken by the economy’s slump have helped boost the deficit into record turf in this fiscal year, which began Oct. 1, 2008. Gross spending on the Troubled Asset Relief Program was $2.89 billion for March — and $293.37 billion for the year to date. Another $46 billion went to Fannie Mae and Freddie Mac — $15.2 billion and $30.8 billion, respectively.

Also driving outlays and widening the deficit are traditional government programs to assist the jobless. The Labor Department‘s latest weekly report on state unemployment insurance benefits, released Thursday, noted another increase in continuing claims. Those claims — drawn by workers collecting benefits for more than one week in the week ended March 28 — surged 95,000 to 5,840,000, the highest level since the government started keeping track in 1967.

March spending totaled $321.23 billion, compared to $227.03 billion in March 2008. Interest payments on the national debt were $19.93 billion, or 6% of total spending for the month. Defense spending ran at $51.674 billion. Veterans benefits were $4.354 billion. Social Security totaled $56.103 billion. Jobless benefit outlays were $10.6 billion.

In February, U.S. President Barack Obama signed a $787 billion package meant to spur an economy in a deep recession that began 16 months ago. The economic relief is seen inflating an already record deficit as the year progresses.

The Treasury report Friday said it bought $17.38 billion in agency mortgage-backed securities during March; year to date, purchases totaled $119.20 billion. Treasury became the buyer of last resort for these bonds when it announced the takeover of Fannie Mae and Freddie Mac in early September. The bonds, guaranteed by Fannie and Freddie, play a critical role in the housing finance market. The yields on these bonds determine the mortgage rates that consumers pay on their home loans.

Year-to-date federal government spending totaled $1.95 trillion, compared to $1.46 trillion in the first six months of fiscal 2008.

The monthly budget statement showed March federal government receipts totaled $128.96 billion, down from $178.82 billion a year earlier. Individual income-tax receipts totaled $41.23 billion, compared to $56.71 billion in March 2008. Corporate taxes totaled $3.39 billion, compared to $32.57 billion in March 2008. Recent government data showed corporate earnings after taxes fell 28% in the fourth quarter, a period including October-December 2008.

Year-to-date federal government revenues totaled $989.83 trillion, compared to $1.15 trillion for the first six months of fiscal 2008.

The Treasury said it plans to release budget data for April on May 12, 2009.

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